A movement that sprang from late 20th-century Roman Catholicism and has found a particularly welcoming environment in Latin America, liberation theology holds that the church must stand on the side of the impoverished and the downtrodden, and that it must, if necessary, support the overthrow of social systems that contribute to their oppression. Its more extreme advocates believe that capitalism is chief among the oppressive systems in causing social and material inequities around the world.

This movement is usually held to have begun with the second Latin American Bishops’ Conference, which was held in Colombia in 1968. At that conference, the attending bishops proposed to combine the teachings of Jesus Christ with those of Karl Marx as a way of justifying violent revolution to overthrow the economics of capitalism. The bishops interpreted every biblical criticism of the rich as a mandate to redistribute wealth from the haves to the have-nots, and every expression of compassion for the poor as a call for a social uprising by peasants and workers. At the end of the conference, the bishops issued a document affirming the rights of the poor and accusing industrialized nations of enriching themselves at the expense of Third World countries.

The liberation theology movement's seminal text, A Theology of Liberation, was written in 1971, three years after the Bishops’ Conference, by Gustavo Gutiérrez, a Peruvian priest and theologian.

But liberation theology's real creator was the Soviet Union's foreign intelligence and domestic security agency, the KGB. Patriarch Kirill, who today heads Russian Orthodox Church, secretly worked for the KGB under the code name “Mikhailov” and spent some 40 years promoting liberation theology. Ion Mihai Pacepa, the highest-ranking Soviet-bloc official ever to defect to the West, writes: "Liberation theology has been generally understood to be a marriage of Marxism and Christianity. What has not been understood is that it was not the product of Christians who pursued Communism, but of Communists who pursued Christians.... Its genesis was part of a highly classified Party/State Disinformation Program, formally approved in 1960 by KGB chairman Aleksandr Shelepin and Politburo member Aleksei Kirichenko, then the second in the party hierarchy after Nikita Khrushchev."

Adds Pacepa: "In 1971, the KGB sent Kirill — who had just been elevated to the rank of archimandrite — to Geneva as emissary of the Russian Orthodox Church to the World Council of Churches.... Kirill/Mikhailov’s main task was to involve the WCC in spreading the new liberation theology throughout Latin America. In 1975, the KGB was able to infiltrate Kirill into the Central Committee of the WCC — a position he held until he was “elected” patriarch of Russia, in 2009. Not long after he joined the Central Committee, Kirill reported to the KGB: 'Now the agenda of the WCC is also our agenda.'”

Prior to liberation theology, Catholicism was unambiguously hostile to socialism and communism, which it saw as “godless.” From the earliest centuries of the Christian era, a long line of orthodox theologians had consistently rejected collective ownership, embraced private property, and affirmed business economies. In the first year of his papacy, Pope Leo XIII (1878-1903) devoted an encyclical to criticizing socialism.

But in using the texts of the New Testament to justify political activism, even violent activism (Jesus was often portrayed as a revolutionary dressed in guerrilla fatigues and carrying a rifle), liberation theology seemed to embrace socialist theory as well. Dressing up Marxism as Christianity put it at odds with the Vatican, which, in the 1990s under Pope John Paul II, began trying to slow the movement's momentum through the appointment of more conservative prelates throughout Latin America.

Ultimately, liberation theology was crippled by a convergence of several factors: (a) oppsition by the Church hierarchy; (b) the defeat of the Marxist Sandinistas in Nicaragua and the FMLN in El Salvador; and (c) the free market economics boom that swept through Latin America soon after those defeats. This boom demonstrated that economic growth was a far more efficient way of fighting poverty than armed struggle.